You're ready to start an agency, build your dream team, and close more clients—but where do you begin?
First, we want to say congratulations. 🥳 If you're asking how to start a creative agency, it means you've worked incredibly hard to get here. Owning a small business, especially a creative business, is no easy feat.
In this step-by-step guide, we'll break down exactly how to start a creative agency. We'll also help you make sure it's both wildly successful and profitable. 🚀
What is a creative agency?
A creative agency is a type of marketing agency that specializes in providing creative services. This can include everything from photography and podcast editing to content marketing and web design. Many creative agencies focus on digital marketing strategies, like search engine optimization (SEO) and social media advertising.
An agency brings together multiple talents and specialties under one roof. This allows the client to work with one point of contact for all their needs, instead of hiring multiple freelancers or employees.
Are creative agencies profitable?
The average profit margin for digital marketing agencies is around 15%. This means if your digital agency earns $150,000 annually, your profit would be about $22,500 per year. 🤑 That's a lot of extra money to put towards your goals!
Starting a profitable creative agency can be tough, though. In the beginning, you might face challenges like startup costs and inconsistent cash flow. That’s why it’s so important to have a banking platform that supports your goals.
Relay (that's us! 👋) is an online banking and money management platform that helps marketing agencies get clear on cash flow. With Relay, you can open 20 individual, no-fee business checking accounts. Then, you can organize your money into separate buckets for operating expenses, taxes, and of course, profit. This can help a growing agency stay on budget and avoid overspending.
💡 Jump to section: how to build a profitable marketing agency
When to transition from freelancer to agency
So how do you know when you're ready to start a creative agency? Well, there isn't a magic number of clients that signals you're ready to make the switch. Instead, it's more about your long-term goals and the opportunities you see in the market.
Here are a few signs that it's time to start a creative agency.
😬 You're turning away clients: If you're so swamped with projects that you're saying no to potential clients and money-making opportunities, that's a clear sign you should hire some help.
👏 You've nailed your niche: Do you find yourself driving consistent, amazing results for a certain type of client? Have you discovered a major demand for your services? If so, it means you have a scalable business and it's time to start an agency.
😕 You've stopped enjoying client work: If you feel burnt out from taking on too many projects, starting an agency can free up your time and energy. You'll be able to focus on high-level strategy and delegate day-to-day tasks to your team.
💰 You want to earn money when you're not working: As a freelancer, you'll probably always be trading time for money. But when you own an agency, you can start to build your wealth without relying on billable hours. A profitable business will generate money even when you're not working—and that's the dream, right? 😌
🤝 You want to work with a team: Not every freelancer wants the responsibility that comes with running an agency. If you like working solo, there's nothing wrong with turning down extra projects and keeping your freelance business small.
For many freelancers, though, starting an agency sounds like a dream come true. If you're ready to get your creative agency off the ground, keep reading. ⬇️
How to start a creative agency in 7 steps
It's officially time to turn your freelance business into a profitable agency. The journey might feel like a rollercoaster at times, but here's the key to long-term, sustainable success: enjoy the ride. 🎢 (We know it might sound cheesy, but that doesn't make it any less true!)
Here's how to start your own creative agency in 7 simple steps.
Step 1: Get clear on your goals 🎯
Some of the world’s most successful entrepreneurs say their primary motivation wasn't to make lots of money. Instead, they were fueled by their desire to make a lasting impact on the world.
So what’s the why behind your new business? Maybe you want to spend less time working. Maybe you want to close bigger projects. Whatever the case, clear goals will help you make crucial business decisions, like who to hire and which clients to take on.
Of course, to move your business forward, you'll need revenue-based goals, too. It's always a good idea to define both long-term (2-3 years) and short-term (2-6 months) financial goals for your business.
Finally, you’ll want to write out your goals in a business plan. This document will serve as your agency’s roadmap and give you a clear path to profitability. 🗺
Step 2: Establish your brand 📖
If you've been freelancing for a while, you might have a strong personal brand. However, your agency will need its own unique brand identity.
To develop your agency’s brand, you may want to:
Choose an agency name
Define your agency's core values
Update your pricing and service offerings
Build a new website
Start new social media profiles
Put together a portfolio of past work and client case studies
Once your agency's brand is solid, it's time to tell the world. 📣 Before going public, it’s a good idea to tell your existing clients. Explain why you're launching an agency, what (if anything) will change for them, and what they can expect moving forward.
After that, it's time to make your brand known online. 💻 You might share a press release or go with something less formal, like a LinkedIn post. You could also send out an email to past clients and your professional network—and who knows, maybe you'll land a new client in the process!
Step 3: Assemble your dream team 👏
If you want to build a successful, sustainable agency, building a team should be your top priority. As your business grows, you'll have less time for actual client work—which means you'll need more hands on deck, ASAP.
Most agency owners start by working with other freelancers. This will give you more flexibility as you meet with potential customers and close new deals. Plus, you won't have to worry about the costs that come with full-time employees, like payroll taxes and benefits.
Building a reliable network of contractors can be tough, though. Here are four steps to help you get started:
👩🏼💻 Figure out where you need help: If you're a copywriter, do you need to hire another copywriter? Or would it be better to find someone with a different skill set, like a creative director? If you're currently drowning in client work, it might be best to "clone" yourself first.
👥 Leverage your network to find the perfect hire: The ideal team member might be right in front of you. Ask your friends and colleagues if they know anyone that's looking for extra work. If this doesn’t work, you can also check out job boards like Upwork and Fiverr.
✍️ Give them a test project: Hire your candidate on a project basis and see how they do. If they deliver quality work and are easy to communicate with, you've found yourself a great team member.
📋 Define the relationship: Consider putting your contractors on retainer. This type of monthly, recurring agreement will ensure your team members are available when you need them.
📊 Set aside money to pay your team: As soon as you hire a contractor, set aside the money to pay them. Otherwise, you might be faced with a cash flow issue later in the month...and if you can't pay your dream team, they won't stick around.
Step 4: Close new clients 💰
Selling your services as an agency means you're not just selling your talent, but the combined expertise and skills of your entire team. This can help you close bigger projects and secure more exciting clients. 🤩
Here are a few ways to take advantage of your agency's momentum and find new clients:
Referrals: Leverage your existing relationships and ask your happiest clients to refer others to your agency.
Content marketing: Use platforms like LinkedIn to share tips, insights, and other content related to your niche. This can build your authority as a thought leader and attract clients.
Networking: Attend industry events and join online communities. You’ll be able to build relationships with potential clients and maybe even find a new team member.
Partnerships: Collaborate with non-competitive businesses that share your target market. This can help you reach a wider audience and generate leads.
Pitching: Create a list of companies you'd like to do business with and connect with them via email or social media. Share case studies from past clients and offer your ideas for their company. Remember to personalize each pitch for the client.
When it comes to landing new clients for your agency, the goal should be quality over quantity—so don't worry if you don't close every sale. As long as your agency keeps growing, you're on the right track.
Step 5: Manage cash flow wisely 💸
When your creative agency is growing, it's incredibly exciting. You might start hiring new contractors and purchasing expensive tools...until your rapid-fire spending leads to a sudden cash flow crisis. 😬
This story is more common than you might think—in fact, cash flow problems are the #1 reason small businesses fail. That's why it's crucial to stay on top of your agency's spending, no matter your how much you earn.
How to avoid agency cash flow problems 🙅♀️
As your business expands, it's tempting to spend every extra dollar. But if you don't prioritize profit, your marketing agency won't be able to invest in long-term growth or handle unexpected costs.
The Profit First method, created by entrepreneur Mike Michalowicz, helps small business owners prioritize profit from day one. Businesses that use this method set aside a percentage of revenue for profit first, and then determine how many expenses they can afford. 💸
Here's how the Profit First method works, in 3 easy steps:
Open multiple checking accounts: Create separate bank accounts for income, operating expenses (OpEx), taxes, owner's pay, and profit. 🏦 As a creative agency, you might also want a separate account for payroll. This checking account will hold the money needed to pay your team, whether they're full-time or freelance.
Transfer a percentage of revenue to profit first: Before you start spending, move 5% of your revenue from the income account to your profit account. Profit First recommends 5% for profit, but if you need to allocate less, that's okay! We all have to start somewhere. 💚
Organize the rest of your cash across accounts: Profit First recommends making your transfers on the 10th and 25th of each month. After you make your profit transfer, move your remaining cash from the Income account to your tax, OpEx, owner's pay, and payroll accounts. 💵
The Profit First method isn't just about profit, though. It's also about giving small business owners more visibility into cash flow. 🔎 When your business's money is separated across different bank accounts, you'll always know how much cash you have for expenses.
You'll also be less likely to spend your payroll money on marketing software, and vice versa. This makes it much easier to stay on budget and keep your agency out of the red—even when you're growing quickly. 🤩
Get started with Profit First 🙌
Opening multiple checking accounts at a traditional bank can be a hassle. That's why Relay is the official banking platform for Profit First. 🏦 With Relay, you can open 20 individual, no-fee business checking accounts, completely online.
Then, you can easily make percentage-based transfers between your accounts—no mental math required. When you're ready, you can even automate your Profit First transfers. 🚀
Together, Relay and Profit First have helped thousands of small business owners reach immediate and permanent profitability. Learn more about Profit First and Relay here. 💸
Step 6: Nail your processes 🛠
Starting a creative agency can be overwhelming. You have to learn how to juggle more clients, bigger projects, and a brand-new team. So how do successful agency owners manage it all?
It might not be the most exciting answer, but it's a simple one: process, process, process. 📋
When you nail your processes, your agency will be able to deliver consistent results without reinventing the wheel every time. Plus, if one of your team members ever leaves or takes a break, it'll be much easier to fill in the gaps.
As you start your creative agency, here are a few important processes to document.
Onboarding team members and clients: Create an onboarding checklist for your clients and contractors. This will help you remember all the tasks that come with welcoming a new person to your business, from contracts to training videos.
Accounts receivable: Create a process for tracking invoices and payment timelines. This will ensure that your agency gets paid on time—every time.
Client work delivery: For example, a graphic design agency might list out the steps for designing a logo, from developing a mood board to getting feedback from the client. You should also document how your team will use project management tools.
Accounts payable: Now that you have a team, you'll have to stay on top of accounts payable, too. Create a system for collecting your contractors' payment details and tax documents. You might even consider using an accounts payable tool like Relay Pro to streamline this process.
Ultimately, documenting your processes will improve project management, client work quality, and your ability to collaborate with team members. Though it might take some extra effort upfront, nailing your processes is key to starting a successful creative agency.
Step 7: Scale your agency 📈
You've built a team. You know how to manage cash flow and nail your processes. Now it's time for the final step: scaling your creative agency to the next level. 💸
As your business grows, it will become increasingly important for you to "elevate" your role. This means spending less time on client work and more time as the agency's leader, visionary, and strategist.
Hiring is crucial to making this shift. You'll want to create a talent pipeline and find A-players who can help you scale your agency without sacrificing quality. As your revenue increases, it’s also a good idea to hire some roles in-house. Contractors aren’t 100% committed to your business, so it’s difficult to scale without full-time employees.
As your profits increase, you'll also have the capacity to invest more in marketing and advertising. However, tread carefully. The goal is to gradually expand your client base while maintaining the high quality of work that your current clients love. 🙌
Remember, growth is exciting—but building a solid foundation will sustain that growth over time.
Ready to launch your profitable creative agency? 🚀
Starting a creative agency can be both challenging and incredibly rewarding. Your success will come from setting clear goals, prioritizing cash flow and profitability, and investing in your team.
Always be on the lookout for opportunities to innovate, offer something unique to your clients, and improve your agency's operations. Stay confident, persistent, and optimistic, and you'll be on your way to building a wildly profitable and successful creative agency. 🙌
Relay: Grow your agency with better business banking
The right banking platform can help your new creative agency thrive. That's why we built Relay: to truly serve small business owners like you. With Relay, you can open multiple no-fee business checking and savings accounts. Then, you can leverage powerful money management features to grow your business—like automatic transfers, accounting integrations, and 50 virtual or physical debit cards.
Ready to get started? Sign up for Relay today. 😎
